The business and culture of our digital lives, from the L.A. Times

Apple jumps into the Chinese market, starting with a new store in Shanghai

July 8, 2010 | 6:51
pm

After dipping its toe into the Chinese market two years ago, Apple Inc. is now jumping in.

On Thursday, Apple gave reporters a preview of its newest retail store, a large outlet in Shanghai that opens Saturday. The high-profile location is the first of about 25 stores Apple plans to open in China over the next two years, but the company would not name the other sites.

In front of the new store, next to Shanghai's famous Oriental Pearl Tower, Apple has installed a 40-foot cylindrical glass casing for its logo, similar to the glass box outside its Fifth Avenue store in New York.

Apple wouldn't say how many shoppers it expected for its grand opening at the IFC Mall in the Pudong district of Shanghai, but it's providing free T-shirts to the first 5,000 visitors.

Apple entered the Chinese market with a single store in Beijing that was opened in 2008, just before the summer Olympic Games.

Analyst Richard Doherty of market research firm Envisioneering Group said the move into the Chinese market is a good one. "China is the largest PC market in the world," Doherty said.

Apple said it will continue to work with carrier China Unicom, the nation's second-largest telecommunications company, to help boost sales of its iPhone 3GS, the only model available in the country. The company has not said when it will launch its iPhone 4 and iPad in China.

"We'll see Chinese apps rev up too," said Doherty, with even more in Mandarin, China's official language.

Apple, which is starting with a minuscule market share in China, is diving into a market where underground sales of its phones and other devices remain heavy. The company launched the iPhone in China last year, but tourists and smugglers have been bringing in and selling the devices on the gray market since they hit the U.S. market three years ago, Doherty said.

Because of the underground market, he said, it's hard to gauge the company's growth prospects. "I'd be pulling that number out the air," Doherty said. "None of us will have a dependable metric because of the gray market."

Apple executives were unavailable to comment.

The Chinese cellular market is huge, with some estimates putting it as high as nearly 800 million mobile phone subscribers.

That raises one concern in Doherty's mind: Will Apple have enough devices available for sale should demand soar as it has in other countries?